Low interest rates keeping arrears down

THE number of homes being repossessed fell by 7.5 per cent in the first three months of 2010, new figures show.

The amount of money written off on mortgages fell to 160m over the period, the lowest quarterly level for 18 months, as house prices crept up and mortgage interest repayments remained low.

However, lenders wrote off credit card debts of 1.25 billion in the first quarter, the second highest quarterly figure on record, according to the Bank of England's Financial Stability report, published yesterday.

It said the increase in write-offs was the main reason for the rise in credit card interest rates in recent months.

The rate on the average credit card reached 16.5 per cent in April, compared with 15.2 per cent in July 2007 despite a dramatic fall in Bank of England base rates since then.

The new repossession figures were revealed as the Consumer Credit Counselling Service (CCCS) said it had experienced a big rise in calls from people in rented accommodation needing help with threatened eviction.

More than half of those who contacted CCCS for debt help last year were in rented housing, and the service warned that the rise in the number of renters facing eviction may lead to an increase in the number of homeless.

To contact the CCCS call free on 0800-138 1111.